Should the seller pay the stamp duty?
How do you make it easier for first-time buyers to get on the property ladder and not lose out on tax revenue? Simple - make the seller pay.
We seem to talk of little else here than how property should be taxed. Regular readers will know that if it has to be taxed, I favour an inflation-linked capital gains tax on primary homes. But an interesting idea turned up in the Sunday Times this week from John Stevenson, MP for Carlisle.
He reckons that the best way to sort things out would be to shift the burden of stamp duty from the buyer to the seller. This makes sense in all sorts of ways. It would mean that first time buyers would become exempt. "People wanting to get on the property ladder should not be taxed for doing so."
It would mean that people moving up the ladder would be paying duty on the lower-price house they are selling, not the higher-price one they are buying. And it would mean that the greatest burden fell on those leaving the housing market or downsizing. You might think that this isn't fair but it is true that those leaving the ladder are generally better able to pay the tax than those joining it.
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Stevenson's scheme also comes with the benefit that it doesn't change the final amount of tax paid it could be introduced in a second and work to the benefit of most people in the market while making no change to the finances of the state. I can't think of any other ideas from an MP that I could say the same about.
That said, I still don't think it is as good as a primary property capital gains tax(CGT). Why? First because stamp duty is in general a rotten tax, paid regardless of whether you have made any gains or not. If house prices rise and sellers pay the tax it might in part represent a tax on capital gains, but if they do not, it remains yet another double taxation distortion in the economy.
More importantly, regardless of who pays the tax, it remains a huge barrier to labour mobility in the UK. Stevenson appears to assume that all sellers are upsizing or downsizing. But a large number will be moving sideways for family reasons or work reasons, they'll be looking for a similar house somewhere else. Having to pay stamp duty will mean just as it does when charged to the buyers that doing so penalises them very heavily indeed.
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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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